AGAINST expectations that the third quarter would be a difficult period from a supply perspective, July has opened strongly and on the back of those solid kill numbers beef exports increased.
Figures released last week by DAWR (Department of Agriculture and Water Resources) put the July tonnage at 105,157, the second highest monthly total for the year so far.
This is almost 4000t up on the June result and makes it three months in a row of tonnage in excess of 100,000. The last time that occurred was in 2015.
Interestingly the month gave processors little indication that there was any depth to the numbers coming forward and the money in southern Queensland got progressively better until indicator 4-tooth ox were showing 500 cents on price grids.
Earlier widespread rain across Victoria and parts of southern New South Wales had put the brakes on the liquidation of females that was occurring down there and that compounded the already short numbers of good grass steers and bullocks.
As a result southern operators started appearing at Queensland sales to try to find cattle and it looked as though the struggle for numbers was on.
But while this was happening, Queensland was getting colder and drier and the extra money on the table sealed the fate of any females with a bit of condition that were turning up empty in pregnancy testing rounds.
MLA’s weekly slaughter reports show this run of females reached a highpoint for the year-to-date in Queensland of over 36,000 in the third week of July.
NSW in the same week recorded their second-highest number of females for the year.
A more accurate perspective on what is happening to the Australian herd overall with these elevated female slaughterings will emerge as ABS statistics come to hand but unfortunately there is more than a month time lag in those figures.
At last count in May, the national percentage of females in the kill was a whopping 53.2 and the June and July figures when they come to hand are expected to take this higher.
The run of females bolstering the kill at present is now expected to continue through August but after that there may not be a lot more to come.
Indications are that anything not good enough to kill now will need a season of some sort before they are a killable proposition.
Another factor which arises from the continuing dry times is high numbers on feed and this is timely in respect to growing demand in the higher-quality markets of Japan and Korea.
Japan continues as Australia’s largest beef market with a calendar-year progressive volume to end of July of 184,000t.
The July export figure of 30,195t is significant because it is the first time in five years that monthly volume has exceeded 30,000t.
This confirms that growth is being maintained at 11pc and suggests that the end-of-year result may push up to around 320,000t.
That would be a very significant achievement as the last time a volume of that magnitude occurred was in 2011.
Korea’s growth trajectory is similar to Japan’s in percentage terms. At present it is maintaining a 12pc increase on 2017 trade levels.
The 16,148t exported in July is the highest monthly volume since November 2016 and takes the progressive volume for the year to 91,000t but that in turn may lead once again to exceeding the free-trade-agreement safeguard and triggering snapback increase in tariff.
In parallel with Australia’s gains in these premium markets, major competitor the United States is also enjoying the ride.
To the end of June, the US had exported 159,000t to Japan (its largest export market) and 113,000t to Korea. These figures represent gains of 6pc and 36pc respectively on the previous year.
That gives the US a slightly larger market share over Australia in Japan but a huge advantage over Australia in Korea.
China meanwhile is snapping at the heels of Korea in terms of its position as Australia’s third largest beef market by volume.
Strong trading in May and June was followed up with 14,423t in July taking progressive for the year to 88,000t.
If current growth is maintained, China will overtake the 155,000t it so spectacularly achieved in 2013.
Cow rates back
JUST as quickly as they spiked up in July, cow rates are now peeling back with processors well enough placed for numbers for the moment.
The surge and subsequent fall were most noticeable in the saleyards and surprisingly consistent across eastern states’ markets.
At Wagga on 16 July the score 4 heavyweights hit 262c/kg and averaged 247 while Dalby the same week topped at 259 and averaged a touch better at 250.
In dressed weight terms that saw cows step up to around 490c/kg, the sort of money ox were making only a few weeks earlier.
On Monday this week heavy cows at Wagga averaged just 211c/kg, the same figure achieved at Dalby last Wednesday.
That puts the saleyards back on par with current price grids which are showing 420 at Wagga and 415 in south-east Queensland.
The surge and subsequent fall were most noticeable in the saleyards and surprisingly consistent across eastern states’ markets.
Ox prices however are showing the relative supply differences between the respective locations.
At Wagga indicator 4-tooth ox is still attracting 515c/kg while south east Queensland grids are back around 485.
On the supply side, one major processor I spoke to earlier in the week said the current run looked set to carry through August but after that it was very much in the lap of the gods.
More of the same sort of weather could see another cut into the cow herd and another run similar to the one currently being experienced.
Also the good oats crops that emerged after late rains could start to struggle if early spring brings heat on top of continuing dry and that would mean an earlier than expected turnoff for those cattle which only went on to those crops in early July.
